* Global markets drop on lack of clarity over U.S. Fed plans
* Fiber drifts toward 82-cent level key for mill buying
* U.S. crop worry, China stockpiling underpin cotton market
NEW YORK, Sept 23 (Reuters) – Cotton futures edged down on Monday, succumbing to another session of investor selling as uncertainty over U.S. Federal Reserve policy prevailed.
The most-active December cotton contract on ICE Futures U.S. eased 0.25 cent, or 0.3 percent, to settle at 84.27 cents a lb, down for a third straight session.
Fiber and financial markets fell as a lack of clarity over the Fed’s plans to taper its stimulus program overshadowed better-than-expected manufacturing data from China, the world’s top consumer of many raw materials.
Last week, the U.S. central bank surprised financial and commodities markets by saying it would delay the move, sending cotton to its biggest one-day rally in a month.
“There’s this uncertainty building out of Washington. Uncertainty is kryptonite to a commodities market,” said Ron Lawson, a partner at commodity investment firm LOGIC Advisors.
Cotton prices trended lower in range bound trading, drifting toward 82 cents, the level deemed key to revitalizing mill buying. The December contract settled just above its 200-day moving average of 84.23 cents per lb.
Dealers eyed unfavorable cold weather in key growing regions in Texas and the U.S. Southeast, potentially damaging to a crop whose harvest is under way.
Concerns over the crop in the United States, the world’s top exporter, have underpinned prices in the 2013/14 crop year, which began on Aug. 1.
U.S. farmers are forecast to grow their smallest cotton crop in four years, as many have opted for more lucrative grains crops and as unfavorable weather has damaged yields.
Even so, global surpluses are expected to grow as output continues to outstrip demand.
World inventories are projected to reach a record of nearly 95 million bales by July 31, though more than 60 percent of those are expected to become part of China’s stocks and are considered unavailable to the global market.
A government stockpiling program in China, the world’s top textile market, has underpinned the market and put a floor under global prices.
This month, Beijing began the third year of the controversial program that has driven voracious demand for lower-priced, foreign cotton. (Reporting by Chris Prentice)